Many small businesses don’t have an HR department. Perhaps the owner handles HR, or maybe it’s all done by the office manager. To a point, this is okay, but as your business grows, the person handling HR will become more and more distracted from their core competencies and your company’s mission.
For many small businesses, there is a point of growth when outsourcing HR is the most effective choice. Partnering with a Professional Employer Organization (PEO) can give you access to human resource experts without staffing a full department.
Learn more about what you should expect from your outsourced HR partner
How To Know It’s the Right Time to Work With a PEO
Your company is growing too fast, and you and your staff can’t keep up with the HR needs. Payroll processing alone starts taking a chunk out of your day or even your week.
At the same time, you don’t have quite enough HR work to fill the time of a full-time specialist (although partnering with a PEO is still valuable when you do have an HR team on-site). Here are some other indicators that it’s the right time to make this decision.
You Want or Need to Upgrade Benefits
Good benefits attract top talent. Some people are willing to take a bit of a hit to get in on the ground floor with a new company, but there comes a point where you simply can’t compete without offering employee benefits. A PEO can give you access to Fortune 500-level benefits negotiated at scale.
You Are a Foreign Company Expanding Into the U.S.
No matter where you operate, U.S. labor laws and compliance issues are going to be different. You probably have little to no insight into being an employer in the U.S. Finding an expert in-house can be challenging, but an experienced PEO can help.
Your Investors Are Asking About Compliance
If you are a start-up and have angel investors or a similar group of stakeholders, they want to know their investment is well-managed. This includes knowing that you are staying compliant on HR issues and won’t end up with a business-destroying fine or lawsuit.
You Are Spending Too Much Time on Paperwork
Businesses that don’t have an HR team tend to pass those duties to others. If your CEO, CFO, or even your receptionist is doing HR and would rather spend time on something more relevant to the company’s mission, you may want to consider outsourcing to a PEO.
You Are Not Ready for an HR Emergency
What would you do if a former employee sued you? Are you in over your head on insurance, including workers’ comp? If your office manager deals with major HR issues such as discrimination complaints, this can lead to problems if they aren’t trained to handle these things. If you don’t have qualified specialists, then you are not ready for an HR emergency.
You may be facing far too much risk or have compliance issues you are not even aware of. All of this can lead to a situation where you end up facing a compliance problem. Some issues can result in large fines, and a few violations of wage and hour laws can result in federal or state criminal sanctions, which can fall on the company’s owner. Other issues will affect your company’s reputation as an employer and ability to hire top talent in the future.
You Know You Need A Better Way to Handle Things
Maybe you aren’t experiencing these problems, but you know that you can handle HR more efficiently. Your knowledge is in other business areas and in developing your product, and the people you hire are chosen for things other than their expertise in HR.
You know you aren’t handling HR efficiently, but you don’t know how to do better, and it wouldn’t be a great use of your time to spend hours upon hours learning. Many business owners who find themselves in this position find PEOs, often referred by satisfied clients.
Partnering with a PEO does not mean you are losing control while handing off certain responsibilities. It means you are utilizing their expertise to free your time to grow your business. To find out more, download our eBook, “How HR and PEOs Work Together for Business Success.”
